How Open Innovation Can Accelerate your Business

Magdy Abdel-Malik of Quaestio Global Partners  joined us this week on Twinning Strategy  to share his deep expertise in open innovation. Magdy has spent decades building Open Innovation functions and advising companies in best practices. The Open Innovation proposition is that perhaps your organization is not the best to innovate in some areas. Open innovation allows you to tap the expertise of a broad range of entrepreneurs,  external research, and the deeper focus that smaller organizations can provide to your problem. It is easy, as Magdy points out to fall into the "Not Invented Here" mindset, and dismiss out of hand what an outside organization can bring to the table. However, at what cost and gain is that position justified. Will your team be able to maintain and scale the capability? Or will they move on to the next project, leaving this capability stuck in a previous decade. Enlisting outside groups, whose sole purpose, perhaps, is to build and drive a capability will open you internal team to be able to do much more. For me, it comes down to this, increasingly, as you move up the corporate hierarchy, the job of the leader is to "get things done" rather than to "do things". In other words, the goal of business is not to prove that the company team can do everything just as well as everyone or anyone else. It is instead, not surprisingly to drive the profitability and competitive advantage of the company. The choice to build or buy is sometimes a strategic decision, and one without a single answer that applies every time. Building capabilities internally may make perfect sense if the customization is very high, but might make no sense if the technology, once it is developed no longer requires substantial infrastructure used to build it in the first place. 

On the innovators side of the equation, Magdy's prescription is to make sure you are ready before you go to the big partners, have the data that supports your claims, and make sure you have understood the need. This is not to say, the project, technology or capability has to come in a box with a pretty bow on top, but rather that you can show the acquiring partner that you understand the gaps and that you know how to fill them. This formulation rings true for me, having been in the process of building an organization for the past few years to bring AI drug discovery capabilities to biotechs and pharmas. But another aspect that for the small startup trying to get in the door in order to promote a (hopefully) win-win proposition is that there is inherently an imbalance between the two organizations, i.e. the innovative start-up and the heavy-hitting, well-funded, well-established client company. It is easy to get caught up in the budget conscious squeeze promoted by the finance group on the one hand, and the 'we'll take what we can get to keep the lights on' position on the other. It is in my mind incumbent upon the innovator to protect themselves from that squeeze when it is in fact not in their best interest, but incumbent upon the client company to be honest with themselves and the smaller company when they see that they really aren't ready to invest so much as   looking for a cheap back up option. Not taking that responsibility may threaten the very innovation culture and process that they were hoping to tap in to.

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